Question 1

A sole trader started the year with opening capital of $50,000. During the year, they introduced a personal vehicle worth $15,000 into the business, took cash drawings of $8,000, and took inventory costing $2,000 for personal use. The business made a net profit of $25,000. What is the closing capital balance? (Enter the number only)

Accepted Answer

Use the accounting equation for capital: Closing Capital = Opening Capital + Capital Introduced + Net Profit - Drawings.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to deduct the inventory taken for personal use as drawings, or treating the introduced vehicle as revenue instead of capital.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 3

More questions from this exam